A Guide to E-Commerce

What is it?

E-Commerce, or electric commerce involves the buying and selling of products or services over electronic systems. These include the Internet and other computer networks. The amount of trade conducted electronically has grown massively since the dawn of the Internet, and the rise is set to continue. In order to be competitive, it is an absolute must for most businesses to be involved with some type of E-commerce.

A large percentage of e-commerce is conducted entirely electronically for virtual items such as music downloads and E Books. However most e-commerce involves the transportation of physical items in some way. Online retailers are sometimes known as e-tailers and online retail is sometimes known as e-tail.

The meaning of electronic commerce has changed over the last 30 years. Originally, electronic commerce meant the facilitation of commercial transactions electronically. These included sending commercial documents such as purchase orders or invoices electronically. The growth and acceptance of credit cards, automated teller machines (ATM) and telephone banking in the 1980s were also forms of electronic commerce.

Common applications

Some common applications related to e-commerce are the following:

Accounting and finance systems
Conferencing Content
Management Systems Documents, spreadsheets, database Domestic and international payment systems
E-mail and messaging Enterprise and client information reporting Messaging
Newsgroup
On-line Shopping Orders and shipment information

Advantages Of E-Commerce

Here are some of the many advantages of E-Commerce

Lower transaction costs – if an e-commerce site is implemented well, the web can significantly lower both order-taking costs and customer service costs by automating processes.

More purchases per transaction – Amazon for example offers a feature that no normal store offers. When you read the description of a book, you also can see what other people who ordered this book also purchased. Features like these mean that it is common for people to buy more books than they might buy at a normal bookstore.

More customer information – A Web site that is well-integrated into the business cycle can offer customers more information than previously available. For example many companies allow customers to track their orders so that they can see exactly where their order is at any one time.
People can shop in different ways. Traditional mail order companies introduced the concept of shopping from the comfort of your home. e-commerce offers this same luxury, but with some new features. These include –

The ability to build an order over several days
The ability to configure products and see actual prices
The ability to easily build complicated custom orders
The ability to compare prices between multiple vendors easily
The ability to search large catalogs easily

Larger catalogs – A company can build a catalog on the web that would never fit in an ordinary postbox. For example the millions of books Amazon sells could not be realistically added to any physical catalog.

Improved customer interactions – With automated tools it is possible to interact with a customer in richer ways at virtually no cost. Many companies send the customer an email when the order is confirmed, when the order is shipped, and after the order arrives. This information is likely to reassure a customer, giving them increased faith in the process. A happy and reassured customer is more likely to purchase something else from the company in the future.

Quick Tips

Here are some quick tips to bear in mind when thinking of engaging in e-commerce

Your prices – a big part of e-commerce is the fact that price comparisons are extremely easy for the consumer. Your price is very important in such a transparent market.

Customer relations – E-commerce offers a variety of different ways to relate to your customer. E-mails, FAQs, knowledge bases, forums, chat rooms etc. Integrating these features into your e-commerce offering helps you differentiate yourself from the competition.

Customer satisfaction – This can make or break any retail establishment. You must always be prepared to help your customers manually if there is no automated option. You may need to periodically refine your automated processes in order to remain time efficient.

In order to stimulate long term sales, you may also wish to consider these other capabilities of e-commerce.

Affiliate programs – you pay other companies to sell your products. This creates a win-win situation as you only pay when a sale is made. This can both raise your company’s sales, and its profile.

Free gifts – they don’t necessarily need to cost your company anything. You could for example give away an E-book that has cost you nothing but the time it takes to write it.

Enticing prospective customers (perhaps with free gifts) to join a mailing list where you tell them about your latest offerings.

Discounts if people spend over a certain amount.
Seasonal or periodic sales.

Common mistakes in e-commerce

Although there is rapid growth in the use of e-commerce, not all e-commerce businesses are successful. Here are some common pitfalls.

Some businesses just add up the costs of hardware, software, and hosting services. They forget to consider the total cost of ownership, including training, maintenance and support, upgrades, marketing and communications, and administration.

Your business may start to grow quite quickly. In order to fully take advantage of this, you must understand the effect of increased sales. It is no good having an increase in sales if you are unable to deal with it. Do you know how you are you going to process and dispatch orders? Will you have the capacity to deal with these increased sales?

Also you must understand the issues around postage and shipping costs and identify the geographical locations that you will ship to and where you will not. You must have a clear pricing policy for shipping, or you will simply confuse your customers, who might then go elsewhere.

It’s surprising how many sites make the mistake of using too many complicated graphic or animation, which slow down the speed of the site. People on the web generally have short attention spans, and you could lose sales if people are waiting for pages to load.

A website should be easy to use, and easy to find the information people require. Bare in mind the ‘three click rule’ where a person should generally be able to natigate themselves to where they need to be in three clicks.

Web pages must also be designed to work with all the common internet browsers, such as firefox, internet explorer, netscape etc. If you do not, then you run the risk of isolating yourself from potential customers.

Many businesses do not provide a good reason for visitors to return to their site. Keep your site fresh and regularly update it with news of your latest offers. Perhaps provide some free online tools or information.

Make sure your marketing strategy is not overly aggressive and annoys customers who perceive it as ‘spam’.

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